Global Macro Service > Research Briefings > China

Moving closer to a trade war

By threatening to impose 10% tariff on an additional US$200 billion of imports from China, the US President Trump has upped the ante on the trade conflict between the two. China has quickly vowed to retaliate and if such an escalation does materialise, it would have significant economic impact on China, the US and the rest of the world, at a sensitive time for the global economy. In principle, there is still room for negotiation and we cannot rule out de-escalation in the coming weeks. But attitudes seem to be hardening. Meanwhile, deeper conflicts are also hard to resolve. Indeed, it looks like the probability of a full-blown trade war between the world’s two largest economies is rising.

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